Published: Tuesday August 21, 2012 MYT 7:54:00 AM
Updated: Tuesday August 21, 2012 MYT 12:06:04 PM
GLOBAL MARKETS-Asian shares rise on ECB hopes despite uncertainty(update)
TOKYO: Shares rose on Tuesday as investors held on to hopes the European Central Bank can trim borrowing costs and help restore confidence in the euro bloc, even as officials denied a report about the shape of its planned bond buying strategy.
But most other assets -- from the euro to oil and gold -- drifted in ranges due to uncertainty surrounding major events that will take place after a couple of weeks of summer lull. There's an ECB's policy meeting on September 6 and euro zone finance ministers will meet in mid-September.
Leaders of Germany, France, the Eurogroup and Greece are meeting bilaterally this week, with a German-Greek dialogue set for Friday over Greece's rescue plans. Global lenders will visit Greece early next month to finalize their assessment of Athens' austerity reforms.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent, inching closer to a three-month high hit earlier this month while Japan's Nikkei stock average inched up 0.1 percent after rising to a three-month high on Monday.
"The current eerie calmness reflects that markets are in a transition from having reacted negatively to what's been decided in the past and waiting for the next event trigger to decide which direction to go," said Yuuki Sakurai, CEO of Fukoku Capital Management.
"While the situation in Europe hasn't changed dramatically, we haven't recently had news as severely bad as in the past, he said. "It's not a 'risk-off' mode but not a 'risk-on' mode. Markets are seeing yellow lights flashing but not yet turning red."
For Sakurai, Germany's strong commitment to support the euro bloc is more crucial for calming markets than measures taken by the ECB, so he said any moves or comments from Germany will be closely monitored.
U.S. stocks were flat on Monday, pausing after a recent rally, but the Standard & Poor's 500 index <.SPX> hovered near a four-year peak. Europe's top shares fell, but Spanish sovereign bonds rallied and lowered their yields further from critically high levels.
The ECB said on Monday it was misleading to talk about decisions not yet taken, denying a weekend report which said the bank is considering setting interest rate targets for any buying of struggling euro zone country's bonds so that it would buy such bonds if their interest rates exceeded a certain premium over German bonds.
The Bundesbank also kept its opposition to the ECB buying euro zone sovereign bonds, even after German Chancellor Angela Merkel voiced support for the ECB's crisis-fighting strategy last week.
"Strictly limited and highly conditional support by the ECB is unlikely to provide an early resolution of the financial stress that confronts 'peripheral' European sovereigns," Barclays Capital said in a research note.
"For now, however, investors seem to be adopting a hopeful rather than skeptical stance," it said.
The dollar traded down 0.1 percent at 79.31 yen, retreating from a five-week high against the yen at 79.66 yen hit on Monday. The euro inched up 0.1 percent to $1.2356.
With the rise in equities markets, Asian credit markets firmed, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by 2 basis points.
Oil inched up, with Brent up 0.2 percent at $113.95 a barrel while U.S. crude futures were barely unchanged at $95.98 a barrel.
Copper was little changed at $7,459.50 a tonne. Spot gold held steady around $1,621.86 an ounce.
The Australian dollar inched up to around $1.0476 from around $1.0450 after the Reserve Bank of Australia's August policy meeting minutes did not offer fresh hint of more easing.
"In a broader sense, investors continue to respond favorably to coordinated global central bank intervention, part of which is the ability to successfully jawbone markets into the belief that whatever they have up their sleeves, central bankers will trump all," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
NEW YORK: Global shares and the euro closed almost flat on Monday after the European Central Bank sought to squash speculation about a form of market intervention to contain the euro zone debt crisis, damping recent investor enthusiasm for risk.
Oil and Treasury prices also hugged their break-even point as the U.S. stock market closed virtually unchanged and posted one of its lightest trading volumes of the year.
Apple Inc powered to an all-time high. The rise in its market capitalization to more than $623 billion made it the most valuable public company of all time. Shares closed at a new peak of $665.15, up 2.63 percent on the day.
German magazine Der Spiegel said over the weekend that the ECB was considering buying debt issued by member countries if their interest rates became too elevated, but a bank spokesman said it was misleading to report on yet-to-be decided matters.
Germany's central bank, the Bundesbank, also on Monday reiterated its opposition to bond purchases, and a spokesman for the German Finance Ministry said it was not aware of any plans for the ECB to target bond spreads.
A recent rally in global equities last week pushed the FTSEurofirst 300 index of top European shares to a 13-month peak and lifted the S&P 500 to nearly four-year highs on hopes the ECB would finally cap the two-year-old debt crisis.
On Monday, Facebook Inc plumbed a new low of $18.75, less than half its IPO value of $38 a share, before rebounding to close up 5.0 percent at $20.011. The Dow Jones industrial average closed down 3.56 points, or 0.03 percent, at 13,271.64.
The Standard & Poor's 500 Index fell 0.03 points, or 0.00 percent, at 1,418.13.
The Nasdaq Composite Index slid 0.38 points, or 0.01 percent, at 3,076.21. In Europe, the FTSEurofirst 300 closed down 0.5 percent at 1,104.86 points.
MSCI's all-country world stock index and its emerging market index both were off about 0.1 percent.
European shares initially rose on the Der Spiegel report that the ECB is considering setting interest rate thresholds for the purchase of euro zone sovereign debt, a move that would discourage speculation.
"We are fishing in the fog at the moment so we need to see some more of the meat regarding the ECB's plans," said Heinz-Gerd Sonnenschein, equities strategist at Germany's Postbank.
Spanish sovereign bonds rallied as traders focused on the prospect of the ECB's intervention in debt markets to help contain the borrowing costs of troubled sovereign debtors.
Investor optimism has improved in recent weeks, said Bruce Bittles, chief investment strategist at Baird, adding it "could be problematic given that sentiment is approaching extreme optimism at a time when the seasonal headwinds begin to surface."
The euro traded near break-even at $1.2344.
The U.S. Dollar Index was down 0.2 percent at 82.469.
The euro's slide is expected to be limited, with the chance of the ECB taking action once the summer holiday season ends leaving investors wary of aggressively selling the currency.
"There are back and forth comments regarding ECB actions keeping the euro under pressure," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"All of this is taking place against the subdued late summer trading backdrop so I wouldn't read too much into any of this."
U.S. Treasury prices also see-sawed near break-even as weakness in stocks bolstered the safe-haven appeal of U.S. government debt. The benchmark 10-year U.S. Treasury note was flat in price, yielding 1.8122 percent.
Oil prices also retreated, even though Brent pared losses to briefly rebound at one point, supported by curbs on North Sea output.
Brent for October delivery settled down 1 cent at $113.70 a barrel.
U.S. light sweet crude oil fell 4 cents to settle at $95.97 a barrel. - Reuters
Wall Street flat after rally; Apple biggest company ever
NEW YORK: Stocks were flat on Monday on signs of fatigue after a six-week run of gains as the European Central Bank quelled speculation about the form of market intervention that may be taken to stem the region's debt crisis.
Despite the lethargic trading, Apple Inc
The S&P 500 remains close to a four-year high, rising nearly 5 percent in the past six weeks. Investors had been waiting for the ECB to take steps to control the euro crisis in September. Last week, the index broke away from the 1,400 level where it had stalled for much of August.
German magazine Der Spiegel said over the weekend the ECB is considering setting interest rate thresholds for any purchases of a struggling euro zone country's bonds. A bank spokesman said it was misleading to report on decisions that still had not been taken.
Germany's central bank, the Bundesbank, also reiterated its opposition to bond purchases. A spokesman for the German Finance Ministry said it was not aware of any plans for the ECB to target bond spreads.
The slight losses on U.S. exchanges compared with much steeper declines in Europe and a fall in the Shanghai index to its lowest level since 2009.
"Over there, the crisis is clearly much more real for them," said Ken Polcari, managing director at ICAP Equities in New York.
"For us, we are still sitting and waiting and people are almost numb to the headlines now so they are not going to make those quick reactions like they did - they are going to be much more patient," said Polcari.
The Dow Jones industrial average <.DJI> shed 3.48 points, or 0.03 percent, to 13,271.72. The Standard & Poor's 500 Index <.SPX> dipped 0.07 points, or 0.00 percent, to 1,418.09. The Nasdaq Composite Index <.IXIC> lost 0.38 points, or 0.01 percent, to 3,076.21.
Coventry shares jumped more than 20.3 percent to $42.04 after Aetna said it will pay $41.10 per share for the company, putting the deal at about a 20 percent premium to the stock's Friday closing price. The deal is the latest in a string of multibillion-dollar acquisitions in the U.S. healthcare sector.
Aetna shares rose 5.6 percent to $40.18.
Lowe's Cos Inc
Struggling retailer Best Buy Co Inc
The global economic outlook is more uncertain now than at the start of the financial crisis in late 2008, Doug Oberhelman, chief executive of Caterpillar
Volume was weak in one of the lightest traded sessions of the year with about 4.83 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, well below the daily average of 6.64 billion.
Declining stocks outnumbered advancing ones on the NYSE by 1,680 to 1,267, while on the Nasdaq, decliners beat advancers 1,432 to 999. - Reuters